Transferring house from LLC to my name, capital gain tax?

Forum|Forum|1 year ago
January 29, 2025
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Hi,

Have a LLC that has me and my wife and the house we live is under this LLC we want to close this LLC since makes no more sense to keep open.

We applied for a quit claim deed trough a attorney to make this transfer to our name Is there any capital gain tax if we do this even if we live in the house and we are basically transferring from the LLC (with me and my wife name) to our names?

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Best answer by DianeW777

No, there is nothing to report since you and your wife are related parties to the LLC. In other words the actual ownership only changes between related parties and there is no sale taking place.

The assets in the LLC will become zero and now belong to you and your wife. Keep all tax records as it pertains to the house or any LLC assets for a future sale, specifically any that used depreciation while part of the LLC. You will need any and all details at that time.

DianeW777Answer

No, there is nothing to report since you and your wife are related parties to the LLC. In other words the actual ownership only changes between related parties and there is no sale taking place.

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TheRavoxAuthor

Really appreciate your help Diane.

Do you know if once we change the property to our name if we plan to sell the house we need to wait for the 2 year period to not have gain tax or we can sell right away since our names were on the LLC and we lived in the house for more than 8 years?

DianeW777

The ownership rule is quite clear.

As long as you owned and lived in the home for two of the five years before the sale, up to $250,000 of profit is tax-free. And if you’re married and file a joint return, that amount doubles to $500,000.

Since the home was technically owned by the LLC, and if you are not in a community property state, then you should wait the two year period to sell if you want to be allowed a home exclusion.

A Limited Liability Company (LLC) is an entity created by state statute. Depending on elections made by the LLC and the number of members, the IRS will treat an LLC either as a corporation, partnership, or as part of the owner's tax return (a "disregarded entity").

Note: If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities. For more information see Election for Husband and Wife Unincorporated Businesses (was not elected when established).

Nine states—Wisconsin, Washington, Texas, New Mexico, Nevada, Louisiana, Idaho, California and Arizona—have community property statutes that affect a married couple's federal income tax return.

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